SB 0768 - Fiscal Note

Fiscal Note - SB 0768 - Allows small employers to participate in the Missouri state health plan

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 3321-01

BILL NO. SB 768

SUBJECT: Insurance - Medical; Employees - Employers; Health Care; State Employees

TYPE: Original

DATE: January 30, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	($140,350)	$0 to ($253,819)	$0 to ($629,665)
Total Estimated Net Effect on All State Funds	($140,350)	$0 to ($253,819)	$0 to ($629,665)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 4 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Conservation, the Department of Insurance, the Department of Social Services, the Department of Transportation, and the Department of Public Safety - Missouri State Highway Patrol assume this proposal would not fiscally impact their agencies.

Office of Administration (COA) officials state the exact costs would be unknown, however, this proposal could drive up current state employee premiums and the state's portion if the majority of small employers would be considered "high risk". COA states the Missouri Consolidated Health Care Plan would provide the actuarial cost in the rate it certifies to COA.

Officials from the Missouri Consolidated Health Care Plan (HCP) state it is not possible to accurately predict the fiscal impact of this proposal because of the many uncertainties such as potential membership, contract rates, benefit structure, or administrative cost. HCP states that board decisions would also be necessary concerning services provided by internal staff, those arranged through separate contracts, and commission fees. HCP further states that information is available regarding what HCP experienced when public entities first entered the plan. HCP states this may or may not reflect activity with private employers, pending the final determination of the issues identified above. HCP states the fiscal impact is a reflection of this experience. HCP assumes the fiscal impact is based on the current HCP structure and experience. HCP assumes the cost allocations would be based on current: 1) Premiums; 2) Administrative fees; 3) Benefit design; and, 4) growth rate.

HCP states the initial startup cost would be born by the state with no income revenue until employers begin joining the plan in January, 2000. HCP states that at some point all of these costs would be repaid and the net cost would be zero. HCP further states that it is unknown what type of repayment structure the board of trustees would adopt in repayment of initial startup costs. HCP states the more aggressive the approach the faster the cost would be repaid through the administrative fees added to the premiums. HCP estimates the fiscal impact to be $140,350 in FY99, $253,819 in FY00, and $629,665 in FY01 for costs to the state.

Oversight has the estimated fiscal impact from $0 to ($253,819) in FY2000 and $0 to ($629,665) in FY2001 to reflect the potential of recoupment of administrative costs.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
GENERAL REVENUE FUND
Costs - Missouri Consolidated Health Care Plan
Startup costs fronted by state	($140,350)	$0 to	$0 to
		($253,819)	($629,665)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND	($140,350)	$0 to	$0 to
		($253,819)	($629,665)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business

Small businesses would be expected to be fiscally impacted to the extent that they would possibly incur reduced premium rates on health insurance. The reduction in premiums would cause small businesses to pay less for health insurance.

DESCRIPTION

This proposal would allow small employers to get health insurance through the Missouri State Employee Health Plan. Small employers would be those with 1 to 50 employees. The effective date would be January 1, 2000.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Insurance

Missouri Consolidated Health Care Plan

Department of Social Services

Department of Conservation

Office of Administration

Department of Transportation

SOURCES OF INFORMATION (continued)

Department of Public Safety

Missouri State Highway Patrol

Jeanne Jarrett, CPA

Director

January 30, 1998